Budget 2018: Landlords, take note! Arun Jaitley can bring this big Income Tax relief for you

By: | Updated: January 24, 2018 1:25 AM

Budget 2018: In most urban areas, maintenance of the building is undertaken by the society, federation, company or common body at substantial rates. However, the same is not allowed as a deduction against the rental income under Income Tax law.

Budget 2018:Arun Jaitley can bring this big Income Tax relief for you under property taxBudget 2018: Currently, under the income tax laws, the income earned through rent for the property is taxable at the rate of 10 percent if it exceeds Rs 1.80 lakhs in a year.

Budget 2018 may bring a big tax relief for the those who rent their properties. In most urban areas, maintenance of the building is undertaken by the society, federation, company or common body at substantial rates. However, the same is not allowed as a deduction against the rental income under Income Tax law. There is a spate of litigation that prevails on account of this item of expense. In its pre-budget memorandum, Institute of Chartered Accountants of India has said that a deduction for the same would lead to considerable reduction in litigation. “No provision presently exists to allow a deduction for maintenance charges paid to a housing society etc even though it is a substantial and recurring expense. New clause be inserted to provide a deduction of maintenance charges paid to Society, federation etc,” ICAI has recommended to the government ahead of Budget 2018.

Currently, under the income tax laws, the income earned through rent for the property is taxable at the rate of 10 percent if it exceeds Rs 1.80 lakhs in a year. If there is any loss from any of the house properties, the same can be set off against any income from other house properties. If there is a net loss under house property, then the same can be adjusted against other income. The said limit of Rs 1.80 lakhs applies to the landlord and not on the property. Both residential and commercial properties are taxable under the law. It remains to be seen if Arun Jaitley will bring any changes to this law in Budget 2018.

Budget 2018: FM Arun Jaitley May Tweak Income Tax Basic Exemption Limit

In Budget 2017, the government had inserted a new section of 194-IB in the I-T Act to provide that an individual or a Hindu Undivided Family (other than those covered under 44AB of the Act) in order to widen the scope of TDS. The new law provided that any person responsible for paying to a resident any income by way of rent exceeding Rs 50000 for a month or part of the month during the previous year, shall deduct an amount equal to 5% of such income as income-tax thereon. Budget 2018 will be the last regular budget of Modi government.

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In another related development last year, FM Arun Jaitley also proposed to restrict the loss on house property, which was allowed to be deducted (adjusted) from income under ‘other heads of income’ including ‘salary income’, up to Rs 2 lakh only. Some experts say restricting the tax deduction on interest paid on rental property to Rs 2 lakh will result in a loss of opportunity for people buying home for rental income. It remains to be seen if the government provides any relief in this regards in Budget 2018.

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